FONT

SHARE THIS

MORE STORIES

Nau: Business (model's own)

Is the the world ready for Nau's business model? Ten years on it seems prophetic.

Nau is ten years old. The company hit the streets in 2007 promising not just a new kind of stylish, eco-friendly outdoor apparel, but a new business model. It would have a chain of showroom stores where people could feel clothing then order it for later delivery. It was ingenious, recognizing shoppers' tactile needs and the efficiency of computerized supply chains. But before Nau could prove itself in sales the economy tanked and Nau shrank back to a boutique.

After three owners the solitary store on Northwest 11th Avenue in the Pearl District is still selling earth-toned hoodies, leggings and rain jackets. As well as the familiar olive, khaki, dun and drab, the company now sells black, grey, white and brown items.

It's as if author Naomi Klein of No Logo fame designed a clothing line.

On a recent morning, the store was empty except for the manager Danielle Romeo, 27. Having worked the madhouses of retail – the Gap, and the Adidas Employee Store - there wasn't much folding for her to do (or "recovery" as they call it at The Gap). The solitary Nau store has its moments: crowded weekends and random busy lunchtimes.

Most of the clientele are tourists, Romeo told the Business Tribune, who started working there this summer. With the shelves are stocked with autumnal colors, she expects the locals to come back once the Indian summer ends and people commit to dressing for another nine months of rain.

She calls the clothing "technical but fashionable," and stresses the sustainability story: Henleys made of cotton blended with Tencel, which is derived from the eucalyptus plant. Insulated jackets are stuffed with cocona, made from coconut husks, rather than down or polyfill. They use micromodal (thin cotton) and boiled wool (felt not-on-steroids).

Nau's tailoring has always been different. Long arms. Asymmetrical placement of pockets, buttons and seams. The quilting on puffa jackets zigzags rather than following boring parallels. Twisted Pants made of thin cotton look like scrubs on the rack but Romeo says they look like jeans on the female body. They sell slimline rain jackets ($298) and fleece-lined leggings ($115) rather than typical outdoor technical wear that makes you look like a backpacker.

Big names, no logo

Nau was founded 2005 by executives and designers from Patagonia, Adidas, Nike and Marmot. It was supposed to show that sustainability and style could go together. The model was forward-thinking ecommerce too: sales were to come from the web and a chain of stores, without using wholesalers. In what sounded like impressive optimism they raised $35 million in backing and targeted opening 140 stores. (The first was in Tualatin. Until recently, that remained Nau's showroom, where shoppers cold touch and feel garments but then had to order them for delivery.)

Nau also pledged to donate 5 percent of sales to nonprofits. This was another early adopter move, in this case, embracing the trend of corporate self-discipline.

It launched in 2007 with around 100 staff. Today that number is 30.

Many hoped it would show that Portland's apparel industry had the chops create startups that could scale quickly and go national.

However, 2007 was a difficult time to be reliant on venture capital, and as the economy crashed and lenders drew their horns in, Nau foundered. In 2008 Horny Toad CEO Gordon Seabury bought the company. (It operates the Lizard Lounge clothing store, also in the Pearl.)

The company changed hands again in 2013 when it Korean outdoor apparel maker Black Yak bought it. A family business, they saved Nau as a project for their son Jun Suk Kang, who is Nau's president. There is a Nau store in Seoul and nine shop-in-shop stores in Korea.

Today Nau's store stocks Millican canvas bags to round out the rugged sophisticate look. Nau items are also stocked by some other retailers, such as REI. But the majority of their sales come online.

Model

Sucheta Bal, business development manager for Athletic & Outdoor Industry at Prosper Portland, said the Nau model is growing.

"We're definitely seeing more a of a model where the physical retail is more of a showroom, a high-end place to bring on local partners, things that enhance the brand. And online, direct to consumer, is where the sale is made."

Bal says Prosper Portland is more about economic development and than helping established companies. The AOI industry is growing here, however, with training programs at Portland State University and the University of Oregon, as well as Pensole's MLab.

"These programs draw people from all over the country, they're coming here to learn about this industry." So the industry that gave birth to Nau is alive and well, although independent players are going to have it touch against the apparel giants.

Dan Tiegs is the owner operator of Portland based WILD Outdoor apparel.

"Nau's spin was always sustainability: this is recycled polyester and merino you can buy with a good conscience. Their other angle was you can wear it out to dinner or in a storm."

"10 years ago Nau was what you'd call metrosexual. It was sleek, lots of grey and black, not a lot of texture, very urban."

Definitely the buzz was heady ten years ago.

"They thought they were going to be the Tesla of retail," says Tiegs.

Yet he notes that today places like Nordstrom are experimenting with the Nau retail model. In Los Angeles there is a small 1,000 square feet store within a store.

"You look at and feel things and then order them for delivery later. It's a curated collection of things you can find in Nordstrom, a pared down intimate space you can have a different experience than browsing the racks."

Maybe Nau was ahead of its time? Nau's boutique was just their brand, but Nordstrom has lots of brands.

"That's the retail model Nau wanted to do 10 years ago. They couldn't do it. The idea is still alive out there. Part of Nau's failure could have been the product, the brand or the retail model."

Startup mentality

Mark Grimes, the entrepreneur and co-founder of the NedSpace co-working space for startups, identifies one Nau problem from the past.

"I loved the original concept, it was an interesting take on retail," he told the Business Tribune.

"But they raised a lot of money in an up economy, which is OK if you know how to steward it and run the company. But a lot of the team didn't have startup backgrounds, they had retail backgrounds. If you run a startup like it's a part of Nike you're going to run out of money quick."

Certainly shopping for clothing online has changed. "Zappos came along and were like, returns, no questions asked, refund your order. Grocers were having trouble selling until they focused on the quality of the produce and the customer service."

He suspects there are hundreds of Naus out there with a small store and a strong apparel brand making good retail sales.

"When Nau launched, 'We're making the world a better place' was part of their story. Look

at Wild Fang. They have two stores in Portland and one in L.A. They've got a story (androgynous feminism) behind the brand and people are looking for that."

Once Nau stopped being a startup it fell off Grimes's radar. But it can come back.

"Building a story is kind of more important than anything now, if you want to grab attention and get people passionate about your brand. Otherwise they're going to go on Amazon (for a rain jacket) and compare prices."

Nau had a little celebration for its birthday on Thursday November 2. There were First Thursday groups of women, designers in interesting glasses, lots of Koreans, and an old couple who looked odd in their Gore-Tex.

Heather Wagner, a web designer, was there to meet a girlfriend. They picked Nau because she walks past it on her way to WeWork every day, but doesn't go in because the limited window display makes it look prohibitively expensive.

"I just lost my vest, so I bought one here," she says pulling a thin down vest from her bag, marked down 30 percent to $129. She came with her service animal dog called Tuesday, who uses her sense of smell to check on her owner's diabetes. "I've not bought anything before, but I like this stuff. I'm always so hot I don't need a thin jacket."

Ironically, that is part of cofounder Mark Galbraith's current pitch: that with the climate getting warmer people don't need big heavy coats any more, but a stylish rain jacket can fill the gap.

"What's been going on here is based on the weather, we've oved from the real traditional warm jackets, thinned down, Italian boiled wool jackets, alpaca sweaters, these versatile layers which are about the weather," he told the Business Tribune. "These layers, you can flex them out, wear them indoors or outdoors. This so called Chinese hoax of global warming seems to be somewhat true."

The preponderance of green is based on using colors from nature. The idea has always been to make neutral garments against which the owner can accessorize however they want. He says Nau would never use a fluorescent color.

The industry has changed as the Nau business model has changed over the years. "We paused, and thought, let's think creatively."

So now sales go where the customer wants them: online. But he still mentions touch and texture as vital to the Nau experience. And it's true, all the garments have interesting textures that you don't find in a camping store.

"Our best gesture is always to be taking some risk." He's looking at body mapping and virtual reality, being able to try on garments virtually.

"Eating a great meal, being close to someone physically you love, and putting clothing next to your skin are the three most intimate things you do every day. So how do you bring the intimacy of clothing in a digital model into your life? It's going to be close up (pictures) to see the texture, more video, and body mapping."

Ultimately, Galbraith wants to go on making quality, long lasting apparel. "It's like home furnishings you don't go out and buy a hot pink couch unless you're Paris Hilton. It should be something you look at a decade from now and still like it. We want a seasonless, ageless, multi-use mentality to our color palate."